Archer Aviation Inc.

08/11/2025 | Press release | Distributed by Public on 08/11/2025 14:47

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated condensed financial statements and related accompanying notes included elsewhere in this Quarterly Report and the audited consolidated financial statements as of and for the year ended December 31, 2024 set forth in our Annual Report. The following discussion includes forward-looking statements, which are based on our current expectations and beliefs concerning future developments and the potential effects of such developments on us. There can be no assurance that future developments affecting us will be those that we have anticipated. See the section titled "Special Note Regarding Forward-Looking Statements" in this Quarterly Report. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those set forth in Part I, Item 1A, "Risk Factors" in our Annual Report.
Overview
Headquartered in Silicon Valley, California, Archer is developing the technologies and aircraft to power the future of advanced aviation. We plan to provide customers with advanced aircraft and related technologies and services in the United States and internationally in both the commercial and defense sectors. We unveiled our first planned production aircraft, an electric vertical take-off and landing ("eVTOL") aircraft, Midnight, in November 2022. In December 2024, we completed construction of our high-volume aircraft manufacturing facility, ARC, located in Covington, Georgia. We started production of aircraft at this facility in the first quarter of 2025 and plan to focus on building aircraft across our facilities in Georgia and Silicon Valley for use to support our commercialization efforts. We are first and foremost working to commercialize our Midnight aircraft which is intended to be used in select major cities around the world. To do so, we are working with aviation authorities, countries, cities, and strategic partners in these locations to obtain certification of our Midnight aircraft and build out urban air mobility ("UAM") networks that will utilize our Midnight aircraft in their commercial operations. In parallel, we plan to continue to advance the development of our aircraft for Archer Defense, as well as other technologies to support the future of advanced aviation.
Our Planned Lines of Business
By maintaining an innovative and disciplined approach to new product and service development, manufacturing, and commercialization we believe that we can deliver advanced aviation technologies and solutions that can service a broad range of industries and applications. We intend to operate in the following areas:
•Commercial:This is planned to consist of the sale of our commercial aircraft ("Archer Direct"), such as Midnight, as well as technologies and services related thereto. In addition, we plan to provide direct-to-consumer aerial ride share services utilizing our aircraft and potentially others in select metropolitan areas around the world with consumers being able to book rides via an app-based platform ("Archer UAM").
•Defense:This is planned to consist of the sale of next-generation aircraft, related technologies and support services for defense applications.
To date, we have not generated significant revenue from either of these planned areas. We will use our cash and cash equivalents for the foreseeable future as we continue to develop our commercial aircraft, defense aircraft, related technologies, manufacturing operations and work to commercialize our commercial and defense aircraft. The amount and timing of any future capital requirements will depend on many factors, including the pace and results of the design and development of our aircraft and manufacturing operations, as well as our progress in obtaining necessary aircraft certifications and other government approvals to begin commercial operations. For example, any significant delays in obtaining such certifications and other government approvals may require us to raise additional capital above our existing cash on hand and delay our generation of significant revenues.
Components of Results of Operations
Revenue
We are still working to design, develop, certify, and bring up manufacturing of our aircraft and thus have not generated revenue from either of our planned lines of business. We do not expect to begin generating significant revenues until we are able to complete the design, development, certification, commercialization, and manufacturing bring up of our aircraft and development of related technologies and services.
Operating Expenses
Research and Development
Research and development activities represent a significant part of our business. Our research and development efforts focus on the design and development of our aircraft, including certain of the systems that are used in it. As part of those activities, we continue to work closely with U.S. and international regulators towards our goal of commercialization. Research and development expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees focused on research and development activities, costs associated with developing and building prototype aircraft, associated facilities costs, and depreciation. We expect research and development expenses to increase significantly as we progress towards commercialization and manufacturing.
We cannot determine with certainty the timing, duration or the costs necessary to complete the design, development, certification, and manufacturing bring up due to the inherently unpredictable nature of our research and development activities. Development timelines, the probability of success, and development costs may differ materially from expectations.
General and Administrative
General and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees associated with administrative services such as finance, legal, human resources, information technology, associated facilities costs, depreciation, and technology and dispute resolution agreements expense. We expect our general and administrative expenses to increase as we hire additional personnel and consultants to support our operations and comply with applicable regulations.
Other Income (Expense), Net
Other income (expense), net consists of miscellaneous income and expense items, including the change in fair value of our warrant liabilities.
Interest Income, Net
Interest income, net primarily consists of interest income from our cash and cash equivalents, net of interest on notes payable.
Results of Operations
The following table sets forth our consolidated condensed statements of operations for the periods indicated:
Three Months Ended June 30,
2025 2024 Change $ Change %
(In millions)
Operating expenses
Research and development (1)
$ 122.4 $ 89.8 $ 32.6 36.3 %
General and administrative (1)
53.7 31.4 22.3 71.0 %
Total operating expenses 176.1 121.2 54.9 45.3 %
Loss from operations (176.1) (121.2) (54.9) 45.3 %
Other income (expense), net (40.0) 9.3 (49.3) NM
Interest income, net 10.2 5.1 5.1 100.0 %
Loss before income taxes (205.9) (106.8) (99.1) 92.8 %
Income tax expense (0.1) (0.1) - - %
Net loss $ (206.0) $ (106.9) $ (99.1) 92.7 %
Six Months Ended June 30,
2025 2024 Change $ Change %
(In millions)
Operating expenses
Research and development (1)
$ 226.1 $ 173.3 $ 52.8 30.5 %
General and administrative (1)
94.0 90.1 3.9 4.3 %
Total operating expenses 320.1 263.4 56.7 21.5 %
Loss from operations (320.1) (263.4) (56.7) 21.5 %
Other income (expense), net 2.0 29.9 (27.9) (93.3) %
Interest income, net 18.9 10.4 8.5 81.7 %
Loss before income taxes (299.2) (223.1) (76.1) 34.1 %
Income tax expense (0.2) (0.3) 0.1 (33.3) %
Net loss $ (299.4) $ (223.4) $ (76.0) 34.0 %
NM=Not Meaningful.
(1)Includes stock-based compensation expense as follows:
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In millions)
Research and development $ 22.9 $ 11.1 $ 34.0 $ 23.5
General and administrative 28.9 11.7 47.9 40.0
Total stock-based compensation expense $ 51.8 $ 22.8 $ 81.9 $ 63.5
Comparison of the Three and Six Months Ended June 30, 2025 and 2024
Research and Development
Research and development expenses increased by $32.6 million, or 36.3%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, as we invested in people and materials to advance our technology development. The increase was primarily due to an increase of $11.8 million in stock-based compensation, an increase of $10.1 million in personnel-related expenses due to a significant increase in our workforce from the prior year period, and an increase of $5.1 million in costs related to engineering, parts and materials to support our increased research and development activities. The remainder of the increase was made up of other incidental items.
Research and development expenses increased by $52.8 million, or 30.5%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, as we invested in people and materials to advance our technology development. The increase was primarily due to an increase of $19.6 million in personnel-related expenses due to a significant increase in our workforce from the prior year period, an increase of $13.5 million in costs related to engineering, parts and materials to support our increased research and development activities, and an increase of $10.5 million in stock-based compensation. The remainder of the increase was made up of other incidental items.
General and Administrative
General and administrative expenses increased by $22.3 million, or 71.0%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase was primarily due to an increase of $21.2 million in stock-based compensation. See Note 9 - Stock-Based Compensation to our consolidated condensed financial statements for further details on our stock-based compensation. The remainder of the increase was made up of other incidental items.
General and administrative expenses increased by $3.9 million, or 4.3%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024. The increase was primarily due to an increase of $32.4 million in stock-based compensation. The increase was partially offset by a decrease of $24.5 million in stock-based compensation associated with the restricted stock units granted to our founder immediately prior to the closing of the Business Combination in September 2021, and a decrease of $10.3 million in the charge for the warrant issued related to technology and dispute resolution agreements, which was fully exercised and settled in 2024. See Note 9 - Stock-Based Compensation to our consolidated condensed financial statements for further details on our stock-based compensation. The remainder of the increase was made up of other incidental items.
Other Income (Expense), Net
Other income (expense), net decreased by $49.3 million and $27.9 million for the three and six months ended June 30, 2025, respectively, compared to the same periods ended June 30, 2024. The decrease was primarily due to changes in fair value of our warrant liabilities. See Note 3 - Summary of Significant Accounting Policies to our consolidated condensed financial statements for further details.
Interest Income, Net
Interest income, net increased by $5.1 million, or 100.0%, and $8.5 million, or 81.7%, for the three and six months ended June 30, 2025, respectively, compared to the same periods ended June 30, 2024. The increase was primarily due to interest income from increased balance in our cash and cash equivalents.
Liquidity and Capital Resources
As of June 30, 2025, our principal sources of liquidity were cash and cash equivalents of $1,724.0 million. We have incurred net losses since our inception and to date have not generated any revenues. We expect to incur additional losses and higher operating expenses for the foreseeable future. We believe that our existing cash and cash equivalents will be sufficient for at least the next 12 months to meet our requirements and plans for cash, including meeting our working capital requirements and capital expenditure requirements.
On October 5, 2023, we entered into a credit agreement (the "Credit Agreement") with Synovus Bank, as administrative agent and lender, and the additional lenders (the "Lenders") from time to time, in an aggregate principal amount of up to $65.0 million for the construction and development of our manufacturing facility in Covington, Georgia (the "Loan"). The Loan under the Credit Agreement shall accrue interest from and including the date the applicable advance is made but excluding the repayment date at a rate of the secured overnight financing rate ("SOFR"), plus 2.0% subject to a SOFR floor of 0.0%. We are required to make interest-only payments for 36 months on the Loan starting on November 14, 2023, followed by monthly interest and principal payments for the remaining maturity, with any outstanding principal, interest and other then outstanding indebtedness due at maturity. The Credit Agreement matures on the earlier of October 5, 2033 or the date on which the outstanding Loan has been declared or automatically becomes due and payable pursuant to the terms of the Credit Agreement. Our obligations under the Credit Agreement are secured by funds in a collateral account and the Credit Agreement is guaranteed by our domestic subsidiaries. We had drawn down the full $65.0 million of the Loan as of June 30, 2025.
In November 2024, we filed a shelf registration statement on Form S-3ASR with the Securities and Exchange Commission ("SEC") and a related prospectus for the sale under a Controlled Equity OfferingSMSales Agreement (the "ATM Sales Agreement") of shares of our Class A common stock, having an aggregate value of up to $70.0 million (the "ATM Program"). We pay the placement agent a commission rate of up to 3.0% of the gross proceeds from any shares of Class A common stock sold through the ATM Sales Agreement. During the three and six months ended June 30, 2025, we did not sell any shares of Class A common stock under the ATM Program. As of June 30, 2025, we had $47.5 million remaining eligible for sales under the ATM Program. In July 2025, we sold 3,921,875 shares of Class A common stock under the ATM Program for net proceeds of $46.3 million.
On August 8, 2024, we entered into subscription agreements with certain investors providing for the private placement of our Class A common stock at a purchase price of $3.35 per share (the "First 2024 PIPE Financing"), pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"). A portion of the First 2024 PIPE Financing closed on August 12, 2024 for 49,283,582 shares of our Class A common stock for net proceeds of approximately $158.0 million, after deducting offering costs. The remaining portion of the First 2024 PIPE Financing covering an aggregate of 2,982,089 shares of our Class A common stock issued and sold to Stellantis N.V. ("Stellantis") closed on January 6, 2025 for net proceeds of approximately $9.6 million, after deducting offering costs.
On December 11, 2024, we entered into subscription agreements with certain investors providing for the private placement of our Class A common stock at a purchase price of $6.65 per share (the "Second 2024 PIPE Financing"), pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. A portion of the Second 2024 PIPE Financing closed on December 13, 2024 for 63,909,776 shares of our Class A common stock for net proceeds of approximately $407.7 million, after deducting offering costs. The remaining portion of the Second 2024 PIPE Financing covering an aggregate of 751,879 shares of our Class A common stock to be issued and sold to Stellantis for anticipated gross proceeds of approximately $5.0 million is subject to the satisfaction of certain closing conditions.
On February 12, 2025, we closed a registered direct offering in which pursuant to the securities purchase agreement dated February 11, 2025, by and between us and certain institutional investors, we issued and sold 35,500,000 shares of our Class A common stock for net proceeds of approximately $289.5 million, after deducting offering costs.
On June 16, 2025, we closed a registered direct offering in which pursuant to the securities purchase agreement dated June 12, 2025, by and between us and certain institutional investors, we issued and sold 85,000,000 shares of our Class A common stock for net proceeds of approximately $816.8 million, after deducting offering costs.
In the long term, our ability to support our working capital and capital expenditure requirements will depend on many factors, including:
•the level of research and development expenses we incur as we continue to develop our eVTOL aircraft and other products and services to be provided in our planned business lines;
•capital expenditures needed to bring up our aircraft manufacturing capabilities, including for both the build out of our manufacturing facilities, component purchases necessary to build our aircraft and support the development of our airline operations;
•general and administrative expenses as we scale our operations; and
•sales, marketing and distribution expenses as we build, brand and market our business lines, products and services.
Until such time as we can generate significant revenue from our business operations, we expect to finance our cash needs primarily through existing cash on hand, pre-delivery payments, equity financing and debt financing.
The following includes our short-term and long-term material cash requirements from known contractual obligations as of June 30, 2025:
Notes Payable
See Note 6 - Notes Payable to our consolidated condensed financial statements for further details on our debt.
Leases
We lease office, lab, hangar, and storage facilities in the normal course of business. Under our operating leases as noted in Note 7 - Commitments and Contingencies to our consolidated condensed financial statements, we have current obligations of $7.4 million and long-term obligations of $16.8 million.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
Six Months Ended June 30,
2025 2024
(In millions)
Net cash provided by (used in):
Operating activities $ (198.0) $ (167.0)
Investing activities $ (34.1) $ (38.2)
Financing activities $ 1,121.3 $ 100.8
Cash Flows Used in Operating Activities
We continue to experience negative cash flows from operations as we are still working to design, develop, certify, and bring up manufacturing of our aircraft and thus have not generated any revenues from either of our planned lines of business. Our cash flows from operating activities are significantly affected by our cash investments to support the growth of our research and development activities related to our aircraft, as well as the general and administrative functions necessary to support those activities and operations as a publicly traded company. Our operating cash flows are also impacted by the working capital requirements to support growth and fluctuations in personnel-related expenditures, accounts payable, accrued interest and other current liabilities, and other current assets.
Net cash used in operating activities during the six months ended June 30, 2025 was $198.0 million, resulting from a net loss of $299.4 million, adjusted for non-cash items consisting primarily of $81.9 million in stock-based compensation, and $8.9 million in depreciation and amortization. The net cash provided by changes in our net operating assets and liabilities was $8.9 million.
Net cash used in operating activities during the six months ended June 30, 2024 was $167.0 million, resulting from a net loss of $223.4 million, adjusted for non-cash items consisting primarily of $63.5 million in stock-based compensation, a gain of $30.3 million due to a change in fair value of our warrant liabilities, and a $5.6 million non-cash charge for the technology and dispute resolution agreements expense. The net cash provided by changes in our net operating assets and liabilities was $7.2 million.
Cash Flows Used in Investing Activities
Net cash used in investing activities during the six months ended June 30, 2025 was $34.1 million, driven by purchases of property and equipment of $28.9 million and acquisitions of intangible assets of $5.2 million within the period.
Net cash used in investing activities during the six months ended June 30, 2024 was $38.2 million, driven by purchases of property and equipment within the period.
Cash Flows Provided by Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2025 was $1,121.3 million, driven by gross proceeds from the registered direct offering of $1,151.8 million, gross proceeds from the First 2024 PIPE Financing of $10.0 million, partially offset by payments of offering costs in connection with financing activities for $44.3 million.
Net cash provided by financing activities during the six months ended June 30, 2024 was $100.8 million, driven by proceeds from shares issued under the ATM Program of $73.3 million, and proceeds from issuance of debt of $25.8 million.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.
For a discussion of our critical accounting policies and estimates, see "Critical Accounting Policies and Estimates" included under Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report. There have been no material changes in our policies from those previously discussed in our Annual Report.
Recent Accounting Pronouncements
See Note 3 - Summary of Significant Accounting Policies to our consolidated condensed financial statements for a discussion about accounting pronouncements recently adopted and recently issued and not yet adopted.
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